This report examines current assessment and eligibility practices relating to special education programs, and proposes changes to current policy and practice that will encourage and support a process that emphasizes determining student need, designing effective interventions, and evaluating outcomes. The paper views the emphasis in federal and state regulation on a categorical model of special education as a significant impediment to service delivery. The proposed approach eliminates the need to determine eligibility by category, and reflects a problem-solving process designed to address student needs within the instructional environment. The report identifies existing regulations which promote positive, comprehensive service delivery, and advocates creating an assessment and service delivery system that is driven by student needs, not categorical labels; linking both federal and state funding to supports and services rather than to categorical reporting; and supporting systematic experimentation to promote the design of comprehensive, needs-based models of service delivery. (Contains approximately 100 references.) (JDD)